Author Topic: Hi, I am RootofGood! Retired at 33, life is good!  (Read 38046 times)

iamlindoro

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #50 on: October 07, 2013, 11:32:56 AM »
What does that link really mean?  It is one person's opinion of what retirement is, this is my opinion.  Maybe the OP's (RootofGood) spouse is working just for the fun of it.  If so, then he is indeed retired.   My wife is not working for the fun of it and I am trying to make her life outside of work as easy as possible (doing house chores and renovation, cooking meals, getting our finances ready for when she quits).  I don't consider either of us retired until we both can work for fun or not work at all.

Otherwise you can say my mom retired at age 17 (I think she had a job as a babysitter at 15 and 16).  If so, then she should start a blog, "how to retire at age 17"

Well, his blog and numerous posts here claim he and his wife are financially independent, implying they don't NEED to work at all.  But you tell him he's not retired.  I posted the link because based on those facts and you telling him whether or not he's retired, it seems like you're being a bit "Internet Retirement Police"-y.
« Last Edit: October 07, 2013, 11:36:09 AM by iamlindoro »

Roland of Gilead

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #51 on: October 07, 2013, 11:41:17 AM »
Well, his blog and numerous posts here claim he and his wife are financially independent, implying they don't NEED to work at all.

Ok.  I haven't read his blog (I don't do blogs) so I didn't realize his wife was just working for fun.  That is certainly ok and would fit my definition of them both being retired.  Warren Buffett still works after all, and he has a net worth that is probably 20x greater than all of ours combined.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #52 on: October 07, 2013, 11:55:11 AM »
Well, his blog and numerous posts here claim he and his wife are financially independent, implying they don't NEED to work at all.  But you tell him he's not retired.  I posted the link because based on those facts and you telling him whether or not he's retired, it seems like you're being a bit "Internet Retirement Police"-y.

It's no big deal - we can each call ourselves retired or kept man depending on our situation. 

My wife isn't exactly working for fun.  She is working for fun money however.  We have ample money to live indefinitely with a withdrawal rate around 3% or a little less.  That includes moderate vacations.  While the money is flowing in, why not pile on some more? 

As for her job, she gets paid well.  Her job is very flexible (if she wants, she can come in late, leave early, and work from home whenever).  She's up for a big promotion, bonus, and pay raise in a couple months, so while we don't absolutely need the money, it would be a little silly to quit today instead of, say April 2014.  She also has a 3 month mostly paid sabbatical coming up potentially summer of 2014, so maybe Sept/Oct 2014 will be the date for her.  However the kids will still be in school, so July 2015 might be the date.  No definite plans now other than "soon".  If something fell in my lap tomorrow that paid me a great salary for interesting work on easy terms, I would have to carefully consider turning down the opportunity. 

I don't look at using the word "retirement" as a permanent swearing off of work for any reason.  Who knows, I may go part time at some food service or restaurant just for fun.  The money would be a joke, but I might pick up some culinary skills I don't have today.  And knowing I can quit at any time means I don't have to take B.S. 

As to Roland of Gilead's question earlier regarding a 5 month Florida vacation: Today we couldn't pop off to Florida and decide to stay for 5 months.  We have young kids in school, so it would require a little more planning than that "spur of the moment".  And our finances today couldn't easily support a second home in Florida for 5 months, for example.  We could probably do a month or two somewhere, and I'm thinking that may happen if she takes her sabbatical next summer. 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #53 on: October 07, 2013, 10:42:40 PM »
I figured I would put up a "Hi, I am" thread here since I've been posting for a while (and lurking for a couple years). 

In brief, 33 years old, living in Raleigh, North Carolina, married with 3 young kids (age 1, 7, and 8).  Just retired from the engineering field one month ago.  As you could imagine, it has been a little surreal this last month. 

How did we get to financial independence at 33?  We have been mustachians our whole life without even knowing it until a couple years ago when the concept of Mustachianism came about.  Hard core saving and low cost investing and just letting the portfolio grow passively (with some rebalancing every month or two based on target allocations).

I have to admit, we don't follow the mustachian principles in full (I don't even have a bike!), but we do live very well on the cheap ($23000 core expenses in rough terms).

What have I been up to in my first month of retirement?

Here was my list of goals for the first month or so:
1. Ebay a bunch of stuff
2. Learn a foreign language or 3
3. Investigate starting a blog and/or a Youtube channel
4. Get more exercise
5. Cook even more than I already have been, and perfect some new dishes
6. Hang out with more people more often
7. Play more video games
8. Read more books

How am I doing?
1. Ebayed a couple things, but not the 8-10 things I wanted to.

2. Learn a foreign language - working on French language at Duolingo.com, and trying to do one module per day at least.  The last week I have been pretty successful, but I need to focus more

3. Investigate starting a blog and/or a Youtube channel - got the blog up and going, no progress on the youtube channel.  The blog is an incredible time suck and an addicting hobby.  I regret I never spent any time before on a project like this!  But I plan to back off the time investment a little bit in month #2.

4. Get more exercise - big check. Walking kids to/from school (total 2+ miles/day) and walking to grocery, other shopping, library, community center etc with the 1 year old.

5. Cook even more - check.  Plenty of time to cook, and try some new recipes and techniques.  Tamales and french bread have been two recent successes.  And I don't feel guilty at all that it took me almost all day to make tamales.   
 
6. Hang out with more people more often - check!  Play dates with other kids and their parent(s), and we hosted our older girls' first sleepover.  Ample lunches with old buddies and reconnecting.  Getting good vibes from everyone on the retirement, no "complainypants" so far. 

7. Play more video/computer games - I'm a little disappointed in myself, I thought I would do a better job.  I'll leave this on the list for month #2 and subsequent months.

8. Read more books - I have slacked off here as well.  This will be a higher priority next month.  I love to read, and I'm pretty sure the weather will be perfect for some porch sitting and book reading. 

If you are interested in a little more detail of how I managed to retire at 33, I finally got around to putting together a not so brief overview and posted it to my blog today:

rootofgood.com/early-retirement-at-33-an-overview/

Overall, I have to say it has been a blast even though I have been extremely busy.  I figured I would lay around and decompress for a month or two but instead I've been pretty busy.  Kids will do that to you I guess.

So "hi" and I look forward to seeing old friends and new here at the MMM forums.

Awesome job man. Congrats to you.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #54 on: October 08, 2013, 12:00:56 PM »
Quote
Hi, my wife and I have over $100k in student loan debt.  We don't plan on paying much of it back

Hello and welcome.

I don't really agree with this. If you are more than able to repay your debt, I feel like you should, instead of leaving it for us taxpayers to pay. Just my two cents.

(Sorry for beating around the bush and highjacking the other thread with this)

Undecided

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #55 on: October 08, 2013, 02:21:02 PM »
Quote
Hi, my wife and I have over $100k in student loan debt.  We don't plan on paying much of it back

Hello and welcome.

I don't really agree with this. If you are more than able to repay your debt, I feel like you should, instead of leaving it for us taxpayers to pay. Just my two cents.

(Sorry for beating around the bush and highjacking the other thread with this)

But if they'd spent that money on ordinary consumer behavior, rather than saving it, you'd be ok with them taking the loan forgiveness program?

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #56 on: October 08, 2013, 03:32:20 PM »
Quote
Hi, my wife and I have over $100k in student loan debt.  We don't plan on paying much of it back

Hello and welcome.

I don't really agree with this. If you are more than able to repay your debt, I feel like you should, instead of leaving it for us taxpayers to pay. Just my two cents.

(Sorry for beating around the bush and highjacking the other thread with this)

I get your concern and I understand how some could think I am shirking my responsibility and doing something underhanded.  I fully intended to repay the loan when I entered into the loan agreement.  I am still paying it and will continue to pay it per the terms of this (IMHO) overly generous student loan program. 

If it is any consolation, we have been paying the loans for at least 10 years. 

I don't think that the fact that we might end up having $80-100k of debt forgiven in another 23 years is the biggest cost to the tax payers fyi.

The whole higher education funding structure is so byzantine and full of money sloshing around, I can't even begin to assess the ethical dimensions of our eventual forgiveness of debt. 

Allow me to explain.  Between Mrs. RootofGood and I, our undergraduate educations were subsidized by the state to the tune of around $100k (in state tuition discount plus some reasonable amortization of capital costs used to fund our proportional share of classrooms, facilities, and support infrastructure).  Continue those subsidies into our combined six years of law school and you have another $100k.  Throw in a buttload (I learned that term of art in the state-subsidized law school I attended) of federal student loan interest subsidies and interest rate reductions, and you are probably talking another $100k over the life of the loans (our 30 year fixed rates are 0.75% on debt incurred when prime mortgage rates were in the 7% range, and interest did not accrue on Stafford Subsidized loans while the student is in school).  I'm leaving out a number of other smaller ways that our educations were subsidized (tax deduction of student loan interest, universities don't pay local property tax, "need based" tuition grants, etc).

We have been the recipient of over $300k in subsidies for our educations.  The eventual forgiveness of our student loan indebtedness is in addition to that sum, and represents a small portion of the total education subsidies we received for higher education.

Who knows, our income from investments may far outpace my projections and we will end up repaying a much larger share of our loans (or all of them).  I would be completely okay with that, as I don't mind sharing my good fortunes with the federal coffers.  I would also be okay with abolishing the income based repayment plan completely, or somehow modifying it so that I would not qualify.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #57 on: October 08, 2013, 03:37:28 PM »
Quote
Hi, my wife and I have over $100k in student loan debt.  We don't plan on paying much of it back

Hello and welcome.

I don't really agree with this. If you are more than able to repay your debt, I feel like you should, instead of leaving it for us taxpayers to pay. Just my two cents.

(Sorry for beating around the bush and highjacking the other thread with this)

But if they'd spent that money on ordinary consumer behavior, rather than saving it, you'd be ok with them taking the loan forgiveness program?

With due respect, in this case, it seems like taking advantage of the system. Not frugality.

"Income-Based Repayment (IBR) is designed to reduce monthly payments to assist with making your student loan debt manageable. If you need to make lower monthly payments, this plan may be for you."

"To qualify for IBR, you must have a partial financial hardship."

I believe the plan is for someone without enough income to make payments on the standard repayment plan nor consumerism.

I think I would feel the same if OP received food stamps... He doesn't have the need. Just my opinion.
Fwiw, we were considering putting our loans on ibr, for a yr, as a strategy to repay them all. Maybe this is why OP is FI and I'm not (i'm too proud/stupid and will pay off my debts)

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #58 on: October 08, 2013, 03:51:04 PM »
With due respect, in this case, it seems like taking advantage of the system. Not frugality.

"Income-Based Repayment (IBR) is designed to reduce monthly payments to assist with making your student loan debt manageable. If you need to make lower monthly payments, this plan may be for you."

"To qualify for IBR, you must have a partial financial hardship."

I believe the plan is for someone without enough income to make payments on the standard repayment plan nor consumerism.

I think I would feel the same if OP received food stamps... He doesn't have the need. Just my opinion.
Fwiw, we were considering putting our loans on ibr, for a yr, as a strategy to repay them all. Maybe this is why OP is FI and I'm not (i'm too proud/stupid and will pay off my debts)

FYI, I created a separate thread at http://www.mrmoneymustache.com/forum/welcome-to-the-forum/ethical-dimensions-of-student-loan-income-based-repayment-plans/  if you want to continue the discussion over there. 


RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #59 on: October 09, 2013, 08:32:33 AM »
I am also a "kept man" as I left my job a few years ago (commute wasn't worth the costs when your wife makes over $200K by herself and you were making $40K).  I don't consider either of us retired though until she can quit.  We couldn't go on vacation to the Florida keys and just decide to stay there for 5 months losing our shakers of salt....that is the definition of retired in my book.

I think your decision to quit working was perfectly rational.  After taxes and costs of working like commuting, you were probably making pocket change.  That is certainly a good way to react to the tax code, given its strong disincentives for working more after a certain point. 

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #60 on: October 17, 2013, 12:25:20 PM »
Thanks Root.  Don't take it personally as I subscribe to trust but verify or probably more to verify then trust.....although I will never trust anything fully on the web.  Still have my reservations as to whether MMM is real or just a well written blog and he is really driving a BMW and living in a mansion...reservations are low at this point given how public he has made is life with pictures, stories and other accounts.

Anyway, I am still struggling with the tax rate....I just can't think of how that is possible no matter how many deductions unless you had $75k in capital gains that was offset by $75k of prior losses (a $3k loss carry forward won't do much) and a lot of those other dedcutions/credits are typically phased out with higher incomes.   Not to mention the AMT generally rears its head at some point.  Although, a big piece is the 2x component from both spouse and you being able to do both, but still.

Here is my detailed blog post on my tax situation.  http://rootofgood.com/make-six-figure-income-pay-no-tax/

I did my pro forma taxes for 2013.  $150,000 income, $150 in taxes.

In a nutshell, we cut our w-2 salaries in half using all the workplace tax deferred savings plans and deductions that made sense.

Then put $11000 more into IRAs.  $3,000 capital loss carryover deduction. 

We have 3 kids, so there's another bunch of deductions and $3000 tax credit.

And $5,500 of our income was qualified dividends that we pay no tax on (0% tax rate on qual divs). 

If we made a little less money, we might actually have a negative tax rate. 

For the curious, there are nice spreadsheet screencaps outlining our taxes for 2013 at my blog post (above).  I also go into the tax impact of having 3 kids.  3 kids save us $5,500 in federal income tax. 


tooqk4u22

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #61 on: October 17, 2013, 07:20:51 PM »
Very nice, thanks for posting.  For the record I agree that your taxes shouldn't be that low but as you said it is legal. I cant help but wond why people generally think govt workers are too compensated. ..and that is just factoring pay, benefits and pensions.....AND now tax advantages.  Green (or lack of ) with envy.

Unfortunately I/we dont have ability to shelter $60k in retirement accounts.  I wonder what your taxes would be if you could only do $17.5k in 401k and $5 (?)k in hsa. 
 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #62 on: October 18, 2013, 01:56:01 AM »
...but we have made a few hundred $$$'s with referrals to our realtor (from people overseas looking for homes in our area) ...

If you are not a licensed broker, it is illegal for your realtor to give you a referral fee. They could be fined, disciplined, or lose their license. There are a few states where it may not be a violation of state law. It is illegal in Florida, and regardless of the state, it is illegal if there's a federally guaranteed loan involved. Be careful, both your Realtor and you could be subject to a fine of up to $10k, and a year in jail...

Q: May I share a referral fee with someone who doesnít hold a real estate license?

A: Section 475.25(1)(h), Florida Statutes, prohibits a Florida licensee from paying a fee or compensating someone who doesnít hold a real estate license in Florida or another state.

Roland of Gilead

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #63 on: October 18, 2013, 07:59:24 AM »
We are a two person, single high earner with no kids and a paid off house.

We got reamed this past year with $59,000 in federal tax on a $220,000 income.

It doesn't seem right to pay $59,000 in federal tax when we spend $200 a month on food and our total living expense is less than $20,000 a year.  Our taxes are supporting two more families who can live the way we do.

tooqk4u22

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #64 on: October 18, 2013, 09:07:05 AM »
We are a two person, single high earner with no kids and a paid off house.

We got reamed this past year with $59,000 in federal tax on a $220,000 income.

It doesn't seem right to pay $59,000 in federal tax when we spend $200 a month on food and our total living expense is less than $20,000 a year.  Our taxes are supporting two more families who can live the way we do.

Well it is certainly supporting Root.   I am in the same boat as you generally but different numbers.   When you hear that half the population doesn't pay federal taxes you typically don't think that that includes decent earners.  Sure seems like it is better to be low wage.   My sister and her hubby (local govt employees) make a lot less than us but I will bet that their take home isn't that far off.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #65 on: October 18, 2013, 09:42:23 AM »
We are a two person, single high earner with no kids and a paid off house.

We got reamed this past year with $59,000 in federal tax on a $220,000 income.

It doesn't seem right to pay $59,000 in federal tax when we spend $200 a month on food and our total living expense is less than $20,000 a year.  Our taxes are supporting two more families who can live the way we do.
Here's how your $59k in federal taxes were spent:
$11,210 Defense
$12,980 Social Security
$12,390 Medicare, Medicaid and CHIP
$  7,080 Other safety net programs
$  3,540 Interest on debt
$  4,130 Benefits for retired federal employees and veterans
$  1,770 Transportation infrastructure
$  1,180 Education
$  1,180 Research
$     590 International (non-security)
$  2,950 All other

Insanity

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #66 on: October 18, 2013, 10:00:47 AM »
I hope this doesn't sound snarky, it isn't meant to.  It is general confusion.

You are (were) an employee (or at least your wife was), correct?  Did you get a large refund every year?  If not, then didn't your employer pay your taxes for you?  Was that number so low?

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #67 on: October 18, 2013, 10:04:03 AM »
Rootofgood - Thanks for posting! Governmental workers really have a sweet deal with access to a 401(k) and 457(b) plans. I had no idea of all the great tax strategies available to Governmental workers. But then again, how many people would be willing to live on half of their incomes to max out on theses strategies? I can see how the people that have figured this out can accelerate Financial Independence. I thought I was managing my taxes well by paying an effective federal rate rate in the 10% range on a $200k income. While researching 457(b) plans (because of your post) I discovered that there are no 10% withdrawal penalties like what the 401(k) plan has. 

I'm definitely impressed by your use of the tax code.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #68 on: October 18, 2013, 01:42:19 PM »
I hope this doesn't sound snarky, it isn't meant to.  It is general confusion.

You are (were) an employee (or at least your wife was), correct?  Did you get a large refund every year?  If not, then didn't your employer pay your taxes for you?  Was that number so low?

Not sure if this is what you meant, but I'll chime in anyways.

You can adjust your withholdings so your employer doesn't take too much out, so you don't get a big refund. For us, my dh claims 10 exemptions at work (not when you file your taxes (1040)) So, when we had our second child and simultaneously started contributing to his tsp (401k) he adjusted it at work his take home pay didn't go down as much as he was contributing to his tsp.

http://apps.irs.gov/app/withholdingcalculator/

Insanity

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #69 on: October 18, 2013, 04:21:02 PM »
I hope this doesn't sound snarky, it isn't meant to.  It is general confusion.

You are (were) an employee (or at least your wife was), correct?  Did you get a large refund every year?  If not, then didn't your employer pay your taxes for you?  Was that number so low?

Not sure if this is what you meant, but I'll chime in anyways.

You can adjust your withholdings so your employer doesn't take too much out, so you don't get a big refund. For us, my dh claims 10 exemptions at work (not when you file your taxes (1040)) So, when we had our second child and simultaneously started contributing to his tsp (401k) he adjusted it at work his take home pay didn't go down as much as he was contributing to his tsp.

http://apps.irs.gov/app/withholdingcalculator/

 I know the exemptions, but based on the W-4s, how do you claim that many?  I thought you could only claim for yourself, your spouse and any kids.

Roland of Gilead

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #70 on: October 18, 2013, 04:32:52 PM »
We are a two person, single high earner with no kids and a paid off house.

We got reamed this past year with $59,000 in federal tax on a $220,000 income.

It doesn't seem right to pay $59,000 in federal tax when we spend $200 a month on food and our total living expense is less than $20,000 a year.  Our taxes are supporting two more families who can live the way we do.
Here's how your $59k in federal taxes were spent:
$11,210 Defense
$12,980 Social Security
$12,390 Medicare, Medicaid and CHIP
$  7,080 Other safety net programs
$  3,540 Interest on debt
$  4,130 Benefits for retired federal employees and veterans
$  1,770 Transportation infrastructure
$  1,180 Education
$  1,180 Research
$     590 International (non-security)
$  2,950 All other

You left off $200 for a free Obama phone...I guess I need to cut another check  :-(

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #71 on: October 18, 2013, 04:52:05 PM »
I hope this doesn't sound snarky, it isn't meant to.  It is general confusion.

You are (were) an employee (or at least your wife was), correct?  Did you get a large refund every year?  If not, then didn't your employer pay your taxes for you?  Was that number so low?

Not sure if this is what you meant, but I'll chime in anyways.

You can adjust your withholdings so your employer doesn't take too much out, so you don't get a big refund. For us, my dh claims 10 exemptions at work (not when you file your taxes (1040)) So, when we had our second child and simultaneously started contributing to his tsp (401k) he adjusted it at work his take home pay didn't go down as much as he was contributing to his tsp.

http://apps.irs.gov/app/withholdingcalculator/

 I know the exemptions, but based on the W-4s, how do you claim that many?  I thought you could only claim for yourself, your spouse and any kids.

You can claim as many as you like/need to.  I once knew a guy who got pissed at the state he lived in, so he claimed 99 allowances and then paid quarterly estimated state taxes so that the state did not hold any of his money.  All nice and legal.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #72 on: October 19, 2013, 08:12:46 PM »
Very nice, thanks for posting.  For the record I agree that your taxes shouldn't be that low but as you said it is legal. I cant help but wond why people generally think govt workers are too compensated. ..and that is just factoring pay, benefits and pensions.....AND now tax advantages.  Green (or lack of ) with envy.

I agree that my tax burden is well below where it should be in some hypothetical "fair" world*.  And I said as much in my latest post

Quote
"I am always a little dumbfounded around tax time.  The tax code seems strange and convoluted, and I donít think a family with our level of earnings should have such a small tax bill.  But hey, thatís the law!"

I don't even know if an income tax is the right method of taxation (instead of inheritance, wealth, sales/use/VAT, user fees, etc).  High marginal tax rates certainly impacted my desire to earn a really high income (multiple hundred thousands), which impacted my career choice (engineering instead of biglaw).


*Yikes!  Just used the word "tax" and "fair" in the same sentence.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #73 on: October 19, 2013, 08:18:40 PM »
I hope this doesn't sound snarky, it isn't meant to.  It is general confusion.

You are (were) an employee (or at least your wife was), correct?  Did you get a large refund every year?  If not, then didn't your employer pay your taxes for you?  Was that number so low?

Not sure if this is what you meant, but I'll chime in anyways.

You can adjust your withholdings so your employer doesn't take too much out, so you don't get a big refund. For us, my dh claims 10 exemptions at work (not when you file your taxes (1040)) So, when we had our second child and simultaneously started contributing to his tsp (401k) he adjusted it at work his take home pay didn't go down as much as he was contributing to his tsp.

http://apps.irs.gov/app/withholdingcalculator/

 I know the exemptions, but based on the W-4s, how do you claim that many?  I thought you could only claim for yourself, your spouse and any kids.

You can claim as many as you like/need to.  I once knew a guy who got pissed at the state he lived in, so he claimed 99 allowances and then paid quarterly estimated state taxes so that the state did not hold any of his money.  All nice and legal.

We had to do some careful strategery to get our withholding roughly accurate so that we didn't owe a bunch or get a big refund.  I try to keep my refund to $1k-2k or less, and we have been fairly successful.  I think we had 10 federal exemptions on one of our w-4's (which we simply entered in manually through the online HR payroll system).

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #74 on: October 19, 2013, 09:47:45 PM »
Rootofgood - Thanks for posting! Governmental workers really have a sweet deal with access to a 401(k) and 457(b) plans. I had no idea of all the great tax strategies available to Governmental workers. But then again, how many people would be willing to live on half of their incomes to max out on theses strategies? I can see how the people that have figured this out can accelerate Financial Independence. I thought I was managing my taxes well by paying an effective federal rate rate in the 10% range on a $200k income. While researching 457(b) plans (because of your post) I discovered that there are no 10% withdrawal penalties like what the 401(k) plan has. 

I'm definitely impressed by your use of the tax code.

Glad you learned something new!  I only have $55000 or so in the 457b, but the fact that I can take a withdrawal at any time is a great option to have if I need some extra cash.  Or need to get my AGI up to a certain level. 

10% on $200k isn't bad.  We would be closer to 4% without our kids (on $150k).

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #75 on: October 21, 2013, 10:44:22 AM »
When you hear that half the population doesn't pay federal taxes you typically don't think that that includes decent earners.  Sure seems like it is better to be low wage.   My sister and her hubby (local govt employees) make a lot less than us but I will bet that their take home isn't that far off.

I have always thought about income and jobs in terms of the after tax net compensation.  Sometimes that means having a lower gross salary but a higher post tax compensation level. 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #76 on: October 22, 2013, 12:07:21 AM »
Hey Root, congratulations on your early retirement.

Seeing your to do list after retirement looked pretty ambitious. One of my favorite to do's is nothing.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #77 on: October 22, 2013, 06:26:35 AM »
Interesting synopsis on tax rates/the tax code for the last 3-4 decades, particularly with respect to where the average effective tax rate is now:

http://www.bloomberg.com/news/2013-10-21/how-an-invisible-hand-pushes-u-s-taxes-higher.html

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #78 on: October 22, 2013, 11:03:30 AM »
Great job, not having to work by age 33 sounds marvelous, I don't work outside the home, but keeping my 3 children alive is quite a job ;)

My question is your expenses, can you tell me how you get your auto category so low?

You said you don't bike, so how can it cost you under $300/mo

We don't have expensive cars for, paid cash for them, and our insurance and gas alone is more than that a month.

Thanks!

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #79 on: October 22, 2013, 05:13:18 PM »
Great job, not having to work by age 33 sounds marvelous, I don't work outside the home, but keeping my 3 children alive is quite a job ;)

My question is your expenses, can you tell me how you get your auto category so low?

You said you don't bike, so how can it cost you under $300/mo

We don't have expensive cars for, paid cash for them, and our insurance and gas alone is more than that a month.

Thanks!

Oh stop it!  People are going to think you are a paid shill for the Root of Good blog! 

But seriously, here's a link to an article I just wrote that outlines how I did it:

http://rootofgood.com/auto-costs-on-the-cheap/

In brief,
  • solid cars - 13 year old honda accord and honda civic - low maintenance and low property tax
  • those cars plus good driving records mean low insurance (~$25/mo per person)
  • doing some maintenance tasks myself, occasionally with the help of youtube
  • keeping a maintenance schedule to make sure I do maintenance tasks in the optimal order and on a reasonable schedule
  • walk a lot for every day errands to the kids' school, community center, library, grocery store, dining, dollar store, etc.

Mrs. RootofGood still does about 11,000 miles/yr commuting to work. 

We have 3 kids but manage so far with sedans that aren't too big or gas hogs.  Maintaining sedans is cheaper than bigger cars. Tires are a few hundred $ instead of $700-1000 for minivan/SUV tires for example. 

We also live in the city where almost everything we need is within 2-3 miles (or walking distance).  My 1.5 year old is funny because he automatically goes to the stroller when I say "Ok, time to go" and not the other door that leads to the car.  He isn't used to riding in the car since probably 90%+ of our trips are on foot (with him in the stroller). 

In order to not mislead on our auto costs, our cars are depreciating and will eventually need to be replaced.  So maybe you add another $1000-2000/yr to allow for a replacement fund.  I think we can switch to 1 car once Mrs. RootofGood retires (or earlier if 1 car dies suddenly).  So it may be under $1000/yr. 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #80 on: October 24, 2013, 12:20:00 PM »
Your insurance is crazy low, I am thinking you only have PLPD, right?

That and the walking is my answer then.

We live out in the country, so walking anywhere but the neighbors house is a pretty far destination.

We do keep our costs down by having reliable vehicles that we just waited for a great deal on.

Thanks for sharing.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #81 on: October 24, 2013, 07:19:24 PM »
Quote
Your insurance is crazy low, I am thinking you only have PLPD, right?

That and the walking is my answer then.

We live out in the country, so walking anywhere but the neighbors house is a pretty far destination.

We have more than the state minimums at $50k/$100k for personal injury and property damage.  And comprehensive coverage (which we probably need to drop since the cars aren't worth a lot more than the $1000 deductible). 

We live in the city and probably pay a small premium versus living in the country.  But our transportation costs are very low as a result.  And the convenience factor (ie time savings) makes it worthwhile to live here.  And the best part is we still live on a lake and have no rear neighbors visible when the leaves are on the trees.  It's like living out in the country (except the traffic passing by occasionally).

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #82 on: October 28, 2013, 10:20:20 AM »
When you ran your tax estimate - did you run an AMT scenario?

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #83 on: October 28, 2013, 12:32:59 PM »
You can claim as many as you like/need to.  I once knew a guy who got pissed at the state he lived in, so he claimed 99 allowances and then paid quarterly estimated state taxes so that the state did not hold any of his money.  All nice and legal.
99 allowances but a b*tch ain't one?

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #84 on: October 28, 2013, 12:54:05 PM »
When you ran your tax estimate - did you run an AMT scenario?

Yes I always check.  We don't owe AMT.  A big part of the reason is that our AGI is so low due to so many deductions taken out before our earned income is reported on the W-2. 


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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #85 on: October 28, 2013, 01:14:50 PM »
You can claim as many as you like/need to.  I once knew a guy who got pissed at the state he lived in, so he claimed 99 allowances and then paid quarterly estimated state taxes so that the state did not hold any of his money.  All nice and legal.
99 allowances but a b*tch ain't one?

Nice reference!

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #86 on: November 02, 2013, 05:54:43 PM »
Just to update the thread - I posted about my $32,000 per year retirement budget here:

http://www.mrmoneymustache.com/forum/welcome-to-the-forum/$32-000yr-budget-in-early-retirement-critique/

I figured it might lead to some discussion on retirement budgets more generally so I kept it out of this thread. 
« Last Edit: November 02, 2013, 05:57:15 PM by RootofGood »

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #87 on: November 18, 2013, 12:21:33 PM »
A lot of people ask me what I invest in.  Here's is my asset allocation for the curious:



I go into many more details on my diversification and asset allocation strategy here: http://rootofgood.com/diversification-and-asset-allocation

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile. 


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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #88 on: November 18, 2013, 12:39:40 PM »
Congratulations!!!! It is so nice to be able to read about people whom have made it!!

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #89 on: November 18, 2013, 12:41:19 PM »
A lot of people ask me what I invest in.

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile.

How much of your ER planning is dependent on pumping your blog?

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #90 on: November 18, 2013, 02:02:38 PM »
A lot of people ask me what I invest in.

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile.

How much of your ER planning is dependent on pumping your blog?

I hope that wasn't intended as harshly as it sounds.

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #91 on: November 18, 2013, 02:05:02 PM »
A lot of people ask me what I invest in.

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile.

How much of your ER planning is dependent on pumping your blog?

Zero.  I have a sub 3% withdrawal rate.  The blog is a fun retirement project and an easy way to reference my thoughts on particular issues such as retirement budget, asset allocation, investments, taxes, saving money, and my thoughts on retirement.  Kind of like a diary that I can link to at will. 

You can rest assured that each "view" makes me a tiny fraction of a penny from the advertisements, so I could pump here all day and seriously make almost nothing.  In fact, use an ad blocker and don't click on any ads and it will make me zero!  And it'll use up a tiny sliver of my server capacity to boot (traffic is low enough so it won't matter though)! 

The key information is presented right here (my asset allocation in this case), so no one needs to really click through unless they are interested in more details and a deeper explanation.  If I make some cashola from my blog, it's just gravy to me. Not sure what I'll do if it grows to MMM level money - probably give to charity like a drunken sailor?  Lucky for me I have no such problems yet.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #92 on: November 18, 2013, 02:08:17 PM »
A lot of people ask me what I invest in.

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile.

How much of your ER planning is dependent on pumping your blog?

I hope that wasn't intended as harshly as it sounds.

Haters gonna hate.  Complainypants gonna complain. 

Undecided

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #93 on: November 18, 2013, 02:38:47 PM »
A lot of people ask me what I invest in.

In a nutshell, I have a value and small cap tilt to my portfolio across the US and international investments.  I also have 11% in "alternative investments" - which is a fancy name for my real estate investment trusts (owned through mutual funds/ETFS). 

I'm at 95% equities, so the portfolio can be volatile.

How much of your ER planning is dependent on pumping your blog?

I hope that wasn't intended as harshly as it sounds.

Haters gonna hate.  Complainypants gonna complain.

Tautologists are going to tautologize. My impression is that you promote your blog relatively heavily on this forum, so my question was a genuine one.

RootofGood

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #94 on: November 18, 2013, 03:07:15 PM »
How much of your ER planning is dependent on pumping your blog?

I hope that wasn't intended as harshly as it sounds.

Haters gonna hate.  Complainypants gonna complain.

Tautologists are going to tautologize. My impression is that you promote your blog relatively heavily on this forum, so my question was a genuine one.

What's tautological here?  Are suggesting that my retirement is a sham and I'm somehow planning on getting rich from running a blog, thereby successfully retiring early?  Pretty clever if that's what I'm doing.  Just trying to discern where you are coming from. 

I have updated this thread occasionally with the key parts that form my retirement finances.  This is my journal basically.  The main parts of my "story" are here, so no real reason to visit my site unless you are curious.

Otherwise, I don't think I have posted or "promoted" my personal blog much at all.  I posted a link to my asset allocation earlier today in a thread about asset allocation, otherwise I haven't posted anything from my blog for over two weeks.  Others have linked to my site or referenced me in that time period however (can't control that).

I definitely enjoy the MMM visitors at my blog.  They tend to have the best comments, and I have enjoyed our conversations outside of the forums and in real life on more than one occasion. 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #95 on: November 18, 2013, 03:13:14 PM »
How much of your ER planning is dependent on pumping your blog?

I hope that wasn't intended as harshly as it sounds.

Haters gonna hate.  Complainypants gonna complain.

Tautologists are going to tautologize. My impression is that you promote your blog relatively heavily on this forum, so my question was a genuine one.

What's tautological here?

"Haters [that is, people who hate] gonna hate." You're getting a little sensitive!

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #96 on: November 19, 2013, 11:47:47 AM »
"Haters [that is, people who hate] gonna hate." You're getting a little sensitive!

I would say "confused" is more accurate than "sensitive".  I truly didn't understand your meaning or perhaps a hidden meaning. 

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #97 on: December 09, 2013, 09:53:20 AM »
Just celebrated three months in early retirement. 

It has been awesome so far.  I put together a summary of early retirement month #3: 

  • Iím still working on the French language at duolingo.com.  I havenít touched it in a week or two since Iíve been busy with the holidays and some other fun stuff.
  • Blogging Ė I have slowed down a bit.  Iím getting into a groove of putting out a post or two per week.  Thatís a comfortable pace for me without getting worn out.  Quality, not quantity, right?  I still have at least 50 more topics in the queue and 4-5 draft posts under development right now.  I canít foresee a time when I have nothing of value left to say.
  • Exercise Ė Even though mornings this time of year can be cold in North Carolina, I have still managed to walk to and from school with the kids every day and walk to most other destinations in the neighborhood.  This means a minimum of two miles per day, and sometimes up to five miles per day of walking.
  • Social Ė Thanksgiving means seeing lots of family and friends.  And Mr. RootofGood Jr. keeps me social at least a few times per week with playdates.  Iím still enjoying occasional lunches out with friends, which is a nice break from singing the ABCís all day with Mr. RoG Jr.
  • Entertainment Ė I really enjoy reading books.  Itís a great free activity that I have enjoyed since childhood.  Lately, I have been on an African kick and have at least a few more titles on that topic before I move on to something else.  I tend to get interested in a particular subject, then explore that subject in depth by reading four or five books (fiction and non-fiction).  Then I will get interested in another topic and repeat the in depth exploration.  Itís great to have time to indulge this curiosity.
  • More entertainment Ė Computer games!  Kingdom Rush Frontiers was released in November and I have already beat the game on the most difficult settings.  Great free flash game for those that like the tower defense genre.  Hey, itís a guilty pleasure!  Now what will I do in December??
  • Taking care of Mr. RootofGood Jr. and my daughters continues to consume a lot of my day.  Mr. RootofGood Jr. will be in school in another 3 years, so I know one day I wonít be as busy with him.  His time demands are usually a positive influence.  Heíll pull me to the back door and urge me to go outside and play with him.  That might lead to an afternoon sitting on the back deck watching him play as I lay in the hammock reading a book.  There are worse ways to spend a couple of hours!

I also spent a little time troubleshooting and replacing my in wall oven.  I tried other alternatives (fixing, buying used off craigslist), but ended up ordering a new one for roughly half off the new price.  I budgeted for appliance replacements, so the $500 I spent was fully anticipated in my retirement budget. 

Here's the full blog post I wrote on early retirement month #3.

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #98 on: December 09, 2013, 10:13:32 AM »
Congrats and good for you.  So nice to be able to be there for your young children:)

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Re: Hi, I am RootofGood! Retired at 33, life is good!
« Reply #99 on: December 09, 2013, 10:20:02 AM »
Congrats and good for you.  So nice to be able to be there for your young children:)

Sometimes it is nice.  ;)